Junior minerals explorer Pluton Resources has agreed to acquire the Cockatoo Island iron ore assets in Western Australia’s Kimberley region in a deal that should propel it to producer status.

Pluton shares finished up three cents, or 10.91 per cent, at 30.5 cents.

The company on Friday said it had signed a legally binding term sheet with a joint venture comprising Cockatoo Mining, Cliffs Asia Pacific Iron Ore and HWE Cockatoo to acquire their interest in the Cockatoo Island mining tenements and certain infrastructure.

The acquisition, which is subject to regulatory and third party approval, is expected to be complete in late 2012, when the third stage of mining operations on Cockatoo Island is complete.

“The consideration payable for the potential acquisition and the available iron one tonnage and expected environmental rehabilitation costs, will be calculated and advised after the completion of due diligence, which will commence shortly,” Pluton said in a statement.

Pluton managing director Tony Schoer said the purchase would transform the company into an iron ore producer well ahead of its commencement of mining on Irvine Island, also in the Kimberley region.

“The acquisition of Cockatoo Island and access to its existing infrastructure will eliminate the need to duplicate infrastructure like housing and the airstrip on Irvine Island,” he said.

“Cockatoo contains significant quantities of lower grade ore that may be pre-concentrated on Irvine.

“That would unlock significant value and increase the economic mining life of both the Irvine and Cockatoo operations.”